BAT to invest US$4.7m in Ukraine

September 8th 2017 | Multiple countries | Food and drink | BAT

On September 7th British American Tobacco Plc's (BAT) Ukraine unit said that it would invest HRN123m (US$4.7m) to construct new production facilities in order to expand the capacity of its Prilutsky factory. The UK tobacco giant's local unit said that the expansion would help to increase exports.

BAT Ukraine, which sells the Kent, Dunhill and Lucky Strike brands of cigarettes, among others, said that it currently exports tobacco products to Belarus, Armenia, Georgia, Moldova, Azerbaijan and Singapore. Ukraine's tobacco sector has seen sizeable investment from multinationals, such as the US's Philip Morris International Inc, Japan Tobacco Inc, the UK's Imperial Tobacco Group and BAT, which together control 99% of the Ukrainian cigarette market. The country's role as a processing base for exports could be enhanced by its possible integration into the EU.

BAT's focus on increasing exports from the country comes amid a rise in taxes in Ukraine in recent years. Ukrainian authorities raised the excise tax by 40%, effective January 1st 2016, to HRN318.26 per 1,000 cigarettes. Tax increases, as well as an intensification of the anti-tobacco campaign, is likely to contribute to a reduction in domestic cigarette demand in 2017-21.